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Hi,
I’d like to know how APR works.
Hipotetically, let’s say you have a balance of 3000 and APR of 10%,
but is just a balance, you are not buying anything on that card ,
you are just paying off.

Does that mean every month there is an extra 10%?

Thanks!

2 Thoughts on How does Creditcards APR works?
  1. Reply
    Smokies Hiker
    February 6, 2014 at 5:13 pm

    This link is the best explanation I can find. It does a much better job than I could have done!

    http://www.ehow.com/how-does_4925318_apr-work-credit-card.html

  2. Reply
    Ed Atun
    February 6, 2014 at 5:49 pm

    The APR is a way for you to know the “true” interest rate on a loan ( credit card, home mortgage, car loan). If the interest rate is 9% on your credit card, but your card has a $ 300 annual fee plus $ 200 application fee, then the APR is 9.6%. It is your warning that you are paying more than the basic 9% interest.
    If the APR and the true interest rate on your card is 10%, you will be paying $ 300 a year in interest on the $ 3,000 outstanding. The interest payment would be $ 25 a month.
    There is not an “extra” 10%. Just the 10% that you pay for the use of the card.

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